Latin America eInvoicing: Contracting Considerations when evaluating Local versus Enterprise Solutions
I had an interesting conversation, concerning Latin America eInvoicing, with a CFO for a Fortune 500 multi-national yesterday. And this time, the conversation was not about the legislation that I typically write about or discuss. This time it was about the risks associated with using non-integrated, local vendors to manage eInvoice compliance. Here were the key take-aways from that conversation that should be discussed with your global procurement and legal organizations before contracting with a vendor. There are always underlying issues that go beyond technical requirements.
- If you are installing a 3rd party solution in LATAM that is not tightly integrated within the business process, you are losing part of the value of your ERP system. The 3rd party system, which has no visibility to corporate, now becomes the system of record for government financial reporting.
- Your SAP system is no longer your system of record for operational eInvoice data to the government. All of the important information that is required for auditing is now kept in a 3rd party technology without the oversight and controls that you probably spent millions of dollars on inside of your ERP.
- Data synchronization was a large issue — how do you ensure that the data in the 3rd party database is accurate with your ERP system, especially when there are processes that are linked but not integrated. For example, in Mexico and Brazil you have to cancel an invoice that is now found to be invalid. If you have a 3rd party solution that sits outside the ERP tables, then you have to remember to cancel the billing document once you have canceled the process in the 3rd party solution.
- Support challenges or data issues when trying to close the books at the end of the month or end of the quarter. With stiff government penalties for mistakes, organizations need to ensure they have robust support for the corporate IT and Finance teams that need to roll up global numbers. This is mission critical for public companies. The CFO described a situation where they were unable to report 20 Million dollars in invoiced revenue in LATAM because the eInvoicing solution broke down and was unable to be recovered before the month end. The invoices were never processed for that month.
In summary, Latin America eInvoicing is mission critical and affects your global financial processes and SAP deployments. Make sure you understand the effect working with non-integrated 3rd party solutions will have on your business. Otherwise, the lack of control due to language issues, data quality, an additional system of record outside of SAP, and support challenges could affect your financial reporting.
Take Away: multi-nationals should look for enterprise class solutions that are tightly integrated to the ERP system. The process is difficult enough to implement, monitor, and maintain — let alone having to do that with 3 systems: your ERP, a middleware connectivity layer, and a standalone compliance box.
Also – side note — if you are attending the SAP Financials show in Las Vegas this week. Here is a link to my session: